Project #280 - Accounting Paper

For each one of these you need to thoroughly analyze the questions being posed and answer in complete sentences. I am not requiring any writing style but you MUST cite your sources. Just make sure to cite where you are drawing your information from. I predict this will take you closer to 4-5 hours to complete. While there are no minimum or maximum number of pages required for this assignment, I believe this will take you approximately 5-7 pages (double spaced) to complete this assignment adequately. I have pasted the questions below and also attached it for an easier read. S4-1 (Learning Objective 1: Define fraud) Define “fraud.” List and briefly discuss the three major components of the “fraud triangle.” S4-2 (Learning Objective 2: Listing components of internal control) List the components of internal control. Briefly describe each component. S4-12 (Learning Objective 4” Applying internal control over cash payments by check) Answer the following questions about internal control over cash payments: 1. Payment by check carries three controls over cash. What are they? 2. Suppose a purchasing agent receives the goods that he purchase and also approves payment for the goods. How could a dishonest purchasing agent cheat his company? How do companies avoid this internal control weakness? E4-38 (Learning Objective 4: Evaluating internal control over cash receipts) Radley stores use point-of-sale terminals as cash registers. The register shows up the amount of each sale, the cash received from the customer, and any change returned to the customer. The machine also produces a customer receipt but keeps no record of transactions. At the end of the day, the clerk counts the cash in the register and gives it to the cashier for deposit in the company bank account. Write a memo to convince the store manager that there is an internal control weakness over cash receipts. Identify the weakness that gives an employee the best opportunity to steal cash and state how to prevent such a theft. Case 2. (Learning Objectives 1,2: Learning about fraud; correcting an internal control weakness) This case is based on an actual situation experienced by one of the authors. Gilead Construction, headquartered in Topeka, Kansas, built a motel in Kansas City. The construction foreman, Slim Pickins, hired the workers for project. Pickins had his workers fill out the necessary tax forms and sent the employment documents to the home office. Work on the motel began on May 1 and ended in December. Each Thursday evening, Pickins filled out a time card that listed the hours worked by each employee during the five-day work-week ended at 5 p.m. on Thursday. Pickins faxed the time sheets to the home office, which prepared the payroll checks on Friday morning. Pickins drove to the home office after lunch on Friday, picked up the payroll checks, and returned to the construction site. At 5 P.m. on Friday, Pickins distributed the paychecks to the workers. a) Describe in detail the internal control weakness in this situation. Specify what negative result could occur because of the internal control weakness. b) Describe what you would do to correct the internal control weakness. Ethical Issues For each of the following situations, answer the following questions: 1. What is the ethical issue in this situation? 2. What are the alternatives? 3. Who are the stakeholders? What are the possible consequences to each? Analyze from the following standpoints: (a) economic, (b) legal, and (c) ethical. 4. Place yourself in the role of the decision maker. What would you do? How would you justify your decision? Issue 1. Sunrise Bank recently appointed the accounting firm of Smith, Godfroy and Hannaford as the bank’s auditor. Sunrise quickly became one of Smith, Godfroy, and Hannaford’s largest clients. Subject to banking regulations, Sunrise must provide for any expected losses on notes receivable that Sunrise may not collect in full. During the course of the audit, Smith, Godfroy, and Hannaford determined that three large notes receivable of Sunrise seem questionable. Smith, Godfroy, and Hannaford discussed these loans with Susan Carter, controller of Sunrise. Carter assured the auditors that these notes were good and that the makers of the notes will be able to pay their notes after the economy improves. Smith, Godfroy, and Hannaford states that Sunrise must record a loss for a portion of these notes receivable to account for the likelihood that Sunrise may never collect their full amount. Carter objected and threatened to dismiss Smith, Godfroy, and Hannaford if the auditor demands that the bank records the loss. Smith, Godfroy and Hannaford want to keep Sunrise as a client. In fact, Smith, Godfroy, and Hannaford were counting on the revenue from the Sunrise audit to finance an expansion of the firm. Issue 2. Barry Galvin is executive vice president of Community Bank. Active in community affairs, Galvin serves on the board of directors of The Salvation Army. The Salvation Army is expanding rapidly and is considering relocating. At a recent meeting, The Salvation Army decided to buy 250 acres of land on the edge of town. The owner of the property is Olga Nadar, a major depositor in Community Bank. Nadar is completing a bitter divorce, and Galvin knows that Nadar is eager to sell her property. In view of Nadar’s difficult situation, Galvin believes Nadar would accept a low offer for the land. Realtors have appraised the property at $3.6 million. Issue 3. Community Bank has a loan receivable from IMS Chocolates. IMS is six months late in making payments to the bank, and Jan French, a Community Bank vice president, is assisting IMS to restructure its debt. French learns that IMS is depending on landing a contract with Snicker Foods, another Community Bank client. French also serves as Snicker Foods’ loan officer at the bank. In this capacity, French is aware that Snicker is considering bankruptcy. No one else outside Snicker Foods knows this. French has been a great help to IMS and IMS’s owner is counting on French’s expertise in loan workouts to advise the company through this difficult process. To help the bank collect on this large loan, French has a strong motivation to alert IMS of snicker’s financial difficulties. Focus on analysis: (Learning Objectives : Analyzing internal control with cash flows) Refer to website http://www.footlocker-inc.com/pdf/2007/AnnualReport2007.pdf . 1. Focus on cash and cash equivalents. Why did cash change during 2007? The statement of cash flows holds the answer to this question. Analyze the seven largest individual items of the statement of cash flows ( not the summary subtotals such as “net cash provided by operating activities”) For each of the seven individual items, state how Food Locker, Inc’s action affected cash. Show amounts in millions and round to the nearest $1million. 2. Foot Locker, Inc’s Report of Management describes the company’s internal controls. Show how the management report corresponds to thee of the five objectives of internal control.

Subject Business
Due By (Pacific Time) 04/19/2012 23:00
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